2010 Annual Meeting Remarks by George L. Kirkland

By
George L. Kirkland, Vice Chairman and Executive Vice President of Global Upstream and Gas
Chevron Corporation

Overview of Upstream, Gas and Downstream

Houston, Texas, May 26, 2010

Good morning, everyone. I always like talking about our performance and our future. When we look out into the future, demand for energy is going to be strong, especially in developing countries.

Slide: Long-Term Supply Challenge

Look at the top line of this chart. It depicts future demand for oil. Even if efficiency gains and other sources of fuel flatten demand for oil, a big gap develops between supply and demand as oil fields deplete in the future.

For our upstream business, filling that gap presents opportunities. For our downstream business, it will be more challenging because refineries don't have decline curves, and today's refining sector is suffering from excess spare capacity. We'll discuss what this means for Chevron in a few minutes.

Slide: Investing to Meet the Supply Challenge

To meet the world's energy needs, we plan on investing $21.6 billion in 2010 across all of our businesses. That works out to about $60 million a day. We'll invest 85 percent of that in our upstream activities to meet the supply challenge.

What we're investing in is a world-class queue of projects that will supply energy for years to come.

Let's look at our upstream advantages.

Advantage one: production. We're growing production to meet the demand you saw a few slides back. In 2009, production grew to 2.7 million barrels per day. Most of that growth was due to major capital project startups and ramp-ups, which delivered an incremental 305 thousand barrels per day. In total, our production grew 7 percent. How did that compare with peers? We significantly outpaced them.

Advantage two: strong portfolio. We have an industry-leading queue of energy projects that you'll hear more about in a moment.

Advantage three: exploration success. Since 2002, we've added more than 9 billion barrels of oil-equivalent resources. How does that compare with our peers? According to Wood Mackenzie, an energy research and consulting firm, Chevron remains the leader in underlying resource replacement and finding costs.

Slide: Upstream and Gas: Looking Ahead

In our video, you heard about some of our nine development projects that started up in 2009. Over the next three years, we expect 10 more projects to begin production with a Chevron investment exceeding $1 billion each.

We plan for three to come online this year. The Perdido regional hub in the deepwater Gulf of Mexico has already begun. The third phase of the Escravos Gas Project in Nigeria and the first expansion of the Athabasca Oil Sands Project in Canada will start production later in the year.

We plan seven multibillion-dollar startups for 2011 and 2012: Tahiti Two in the deepwater Gulf of Mexico; Agbami Two, EGTL and Usan in Nigeria; Angola LNG; Platong II in Thailand; and Chuandongbei in China.

As the chart on the right shows, production from project startups between 2007 and 2009 has grown to 460,000 barrels per day. These projects, along with startups, are forecast to deliver more than 800,000 barrels per day by 2012. This production growth from projects demonstrates the strength of our portfolio and our ability to execute.

Slide: Upstream and Gas: Looking Ahead

In addition to these startups, we expect to reach a final investment decision on 15 more projects by 2012. One of these — Papa Terra in Brazil — has already been sanctioned this year. Together, our queue of projects will provide production growth over a sustained period of time.

The centerpiece of all this growth is Australian natural gas. We are that country's largest resource holder. Two projects epitomise the growth: Gorgon and Wheatstone. Both are natural gas projects off Western Australia's north coast.

Gorgon is massive. It's a $37 billion project. We reached the final investment decision in 2009. And we expect first liquefied natural gas, or LNG, in 2014.

Wheatstone is in front-end engineering and design. We expect to make the final investment decision in 2011.

We've made great progress on gas sales for both these projects. Ninety percent of our equity share in Gorgon and 60 percent of Wheatstone is committed.

Continued exploration success in the region has the potential to underpin future expansions of both projects.

Gorgon will be a true legacy project. Not only is it expected to produce energy for more than 40 years. It will be a model of environmental stewardship. Gorgon will be the largest CO2 injection project in the world.

This is how it will work: We'll produce Gorgon natural gas offshore Australia and remove most of its CO2. We'll inject and store the CO2 in a deep sandstone reservoir one-and-a-half miles beneath Barrow Island. And we'll liquify the natural gas on Barrow and transport it to customers.

We expect to inject up to 4 million metric tons of CO2 annually — more than four times as much as any other project in the world. This is estimated to reduce Gorgon's greenhouse gas emissions by about 40 percent.

Gorgon is an enormous project with enormous benefits. It will deliver jobs to Australia and cleaner-burning fuel to Australia and Asia for decades to come.

Now let's look at our downstream advantages.

One: reliability. Chevron leads the industry in refinery utilization.

Two: flexibility. Our refineries are better able to convert a wide variety of feedstocks into valuable, high-quality products.

Three: geography. We've concentrated our assets in North America, where the market has a history of recovering early, and in the Asia-Pacific, which plays a dominant role in future demand growth.

Our downstream has good execution, good assets and good geography. But we're not satisfied with 2009 results. We will further high grade our portfolio and continue to reduce costs.

Downstream has exited 50 countries since 2006. We expect to leave 50 more markets over the next few years. We will create a much smaller portfolio, yet retain volume and scale. The result will be a portfolio in fewer than 40 countries, with a clear focus on North America and Asia.

To summarize, we're in a great position. We had a very good 2009 and are off to a good start in 2010. We have industry-acknowledged advantages, great plans to meet future demand and the technology to make it happen. We have a compelling upstream growth story, driven by our exploration success, our project queue and our Australian natural gas developments. And downstream is making further improvements to address market conditions.

We are well positioned for the future.

CAUTIONARY STATEMENTS RELEVANT TO FORWARD-LOOKING INFORMATION FOR THE PURPOSE OF "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.

This presentation of Chevron Corporation contains forward-looking statements relating to Chevron's operations that are based on management's current expectations, estimates and projections about the petroleum, chemicals and other energy-related industries. Words such as "anticipates," "expects," "intends," "plans," "targets," "projects," "believes," "seeks," "schedules," "estimates," "budgets" and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which are beyond the company's control and are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this presentation. Unless legally required, Chevron undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Among the important factors that could cause actual results to differ materially from those in the forward-looking statements are: changing crude-oil and natural-gas prices; changing refining, marketing and chemical margins; actions of competitors or regulators; timing of exploration expenses; timing of crude-oil liftings; the competitiveness of alternate-energy sources or product substitutes; technological developments; the results of operations and financial condition of equity affiliates; the inability or failure of the company's joint-venture partners to fund their share of operations and development activities; the potential failure to achieve expected net production from existing and future crude-oil and natural-gas development projects; potential delays in the development, construction or start-up of planned projects; the potential disruption or interruption of the company's net production or manufacturing facilities or delivery/transportation networks due to war, accidents, political events, civil unrest, severe weather or crude-oil production quotas that might be imposed by the Organization of Petroleum Exporting Countries; the potential liability for remedial actions or assessments under existing or future environmental regulations and litigation; significant investment or product changes under existing or future environmental statutes, regulations and litigation; the potential liability resulting from other pending or future litigation; the company's future acquisition or disposition of assets and gains and losses from asset dispositions or impairments; government-mandated sales, divestitures, recapitalizations, industry-specific taxes, changes in fiscal terms or restrictions on scope of company operations; foreign-currency movements compared with the U.S. dollar; the effects of changed accounting rules under generally accepted accounting principles promulgated by rule-setting bodies; and the factors set forth under the heading "Risk Factors" on pages 30 through 32 of the company's 2009 Annual Report on Form 10-K. In addition, such statements could be affected by general domestic and international economic and political conditions. Unpredictable or unknown factors not discussed in this presentation could also have material adverse effects on forward-looking statements.